A common director or large customer is not enough by itself
Ind AS 24 paragraph 11 excludes automatic relatedness based simply on a common director or KMP, shared joint control of a joint venture by two venturers, specified normal dealings or economic dependence on a major counterparty. Paragraphs 9–10 still require the full definition and substance of the relationship to be tested. This guide for Ind AS reporters was checked on 27 October 2026 using ICAI’s compendium and the subsequent 2026 amendment notification. ICAI Ind AS 24: paragraphs 9–12.
Apply exclusions as limited statements
A paragraph 11 example removes a particular shortcut; it does not prove that the parties cannot be related through another route. Review control, joint control, significant influence, group structures, relevant persons and close family, and management-entity relationships under paragraph 9. Do not use a common-director exclusion to overlook a person’s separate control of an entity.
Separate commercial concentration from governance evidence
A customer may supply most revenue and still require a separate definition-based assessment. A lender’s normal financial dealings likewise do not automatically establish relatedness. Capture contractual rights, actual decision-making and ownership evidence instead of converting a revenue percentage, credit limit or negotiating power into an invented statutory threshold.
Do not confuse two joint venturers with two joint ventures
Paragraph 11(b) concerns two investors that merely share joint control of a joint venture. Paragraph 9(b)(iii), by contrast, includes two entities that are joint ventures of the same third entity. Diagram the actual relationships before selecting the rule. The same words in a corporate chart can describe different reporting relationships.
Keep definition systems separate
Ind AS 24, AS 18, company-law approval rules and income-tax related-person rules serve different purposes. Reconcile their populations rather than assuming one register conclusively answers all of them. Record why each party is included, excluded or unresolved, the effective period and supporting evidence. Once relatedness is established, perform the separate transaction, balance and commitment disclosure review.
Applicable primary references
ICAI Ind AS 24: paragraphs 9–12 MCA Gazette notification, 12 August 2026: subsequent Ind AS amendments
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Major customer
Customer C accounts for ₹75,00,000 of the reporting entity’s ₹1,00,00,000 revenue, or 75%. Assume economic dependence is the only relevant connection and no paragraph 9 relationship exists. The 75% concentration alone does not make C related under Ind AS 24; other disclosures may still need review.
Illustrative example 2: Common director
Entities A and B have one common director. A purchases ₹8,00,000 from B, owing ₹2,00,000 at year-end. Assume no other paragraph 9 connection. The ₹10,00,000 sum of transactions and closing balance is not itself a relatedness test, and those measures should not be confused.
Illustrative example 3: Normal lender
A bank provides ₹40,00,000 of total borrowings of ₹50,00,000, or 80%. Assume only normal financing dealings and no separate definition-based relationship. That 80% funding share alone does not create relatedness under paragraph 11(c).
Illustrative example 4: Two venturers
A and B each hold a 50% interest and jointly control JV C. Assume this is their only connection. Their interests total 100%, but A and B are not related merely because they share joint control of C. C’s relationship with each investor is a separate assessment.
Illustrative example 5: Two joint ventures of one entity
Assume P has joint control of both J1 and J2, establishing that each is its joint venture. J1 supplies ₹3,00,000 and services of ₹1,00,000 to J2, total ₹4,00,000 transactions. Paragraph 9(b)(iii) makes J1 and J2 related on these facts; this differs from two venturers sharing one JV.
Illustrative example 6: Population reconciliation
A starting register contains 20 parties. Five were included solely for paragraph 11 shortcuts and, after full review, have no other qualifying relationship; two other parties satisfy paragraph 9 but were omitted. The reconciled population is 17: 20 − 5 + 2. Retain the seven documented assessment changes rather than simply replacing the total.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm the reporting framework | Ind AS rather than another definition |
| 2 | Identify the reporting entity | Legal and group boundary |
| 3 | Compile the candidate population | Declarations, ownership and counterparties |
| 4 | Apply paragraph 9 in full | Relationship-by-relationship evidence |
| 5 | Review substance over form | Rights and actual governance |
| 6 | Test paragraph 11 shortcuts | Common directors and normal dealings |
| 7 | Map joint-venture structures | Investors versus investees |
| 8 | Record alternative qualifying routes | No automatic blanket exclusions |
| 9 | Reconcile other-law registers | Explained definition differences |
| 10 | Finalise the disclosure population | Dated conclusions and unresolved items |
Sixteen practitioner FAQs
1. Does a common director automatically make entities related?
Not simply for that reason under paragraph 11(a); test all other relevant routes.
2. Can the parties still be related despite a common-director exclusion?
Yes. Another paragraph 9 relationship may exist.
3. Does a 75% customer concentration establish relatedness?
Economic dependence alone is not enough under paragraph 11(d).
4. Does this remove all concentration disclosures?
No. Other applicable reporting requirements need separate consideration.
5. Is a normal lender automatically a related party?
Normal dealings alone do not establish that status under paragraph 11(c).
6. Can contractual control change that answer?
Assess the actual rights under the relevant definitions and facts.
7. Are two joint venturers automatically related to one another?
Not merely because they share joint control of a joint venture.
8. Are two joint ventures of the same third entity different?
Yes. Paragraph 9(b)(iii) expressly includes that relationship.
9. Why identify the reporting entity first?
Relatedness is assessed relative to the entity preparing the statements.
10. Does a party’s legal label settle substance?
Paragraph 10 directs attention to substance rather than legal form alone.
11. Can AS 18 thresholds be imported mechanically?
No. Apply the Ind AS 24 definition to an Ind AS reporting entity.
12. Does the company-law approval register settle this population?
Reconcile it, but do not assume the definitions are identical.
13. What should an exclusion memo retain?
The specific shortcut considered, full alternative-route review and supporting facts.
14. What if the evidence is incomplete?
Record the unresolved assessment and obtain missing ownership or governance information.
15. Does relatedness itself quantify the note amounts?
No. Perform the separate transaction, balance and commitment disclosure working.
16. What is the final reviewer output?
A dated party-wise definition assessment with evidence and reconciled population changes.
Conclusion
Screen common-director, major-customer and finance relationships against Ind AS 24’s actual definition instead of treating commercial concentration as automatic related-party status.